Nexstim — Update 29 February 2016

Nexstim — Update 29 February 2016

Nexstim

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Nexstim

NICHE stroke rehab trial fails its primary endpoint

Clinical trial update and FY15 results

Healthcare equipment & services

1 March 2016

Price

€1.64

Market cap

€13m

Net cash (€m) at 31 December 2015

6.9

Shares in issue

8.0m

Free float

35%

Code

NXTMH

Primary exchange

Nasdaq First North Finland

Secondary exchange

Nasdaq First North Sweden

Share price performance

%

1m

3m

12m

Abs

(5.2)

(3.9)

13.8

Rel (local)

(0.8)

6.3

28.1

52-week high/low

€7.5

€4.8

Business description

Nexstim has developed a non-invasive brain stimulation technology (nTMS) used as a diagnostic device for brain surgery planning (NBS System, currently marketed); and as an aid to promote rehabilitation after strokes (NBT System, in Phase III trials).

Next event

H116 results

17 August 2016

Analysts

Hans Bostrom

+44 (0)20 3681 2522

Dr John Savin

+44 (0)20 3077 5735

Nexstim is a research client of Edison Investment Research Limited

The pivotal trial of Nexstim’s Navigated Brain Therapy (NBT) System in treating stroke patients has failed to meet its primary endpoint. We suspend our financial forecasts and valuation while Nexstim reviews its next strategic steps. It estimates its cash reach until Q316.

Year end

Revenue

(€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/14

2.2

(10.3)

(2.35)

0.0

N/A

N/A

12/15

2.5

(9.7)

(1.35)

0.0

N/A

N/A

12/16e

N/A

N/A

N/A

N/A

N/A

N/A

12/17e

N/A

N/A

N/A

N/A

N/A

N/A

Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items and share-based payments.

Pivotal device-based stroke rehab trial fails

The Data Safety Monitoring Board (DSMB) has announced the US-based pivotal trial of NBT (NICHE) failed to reach its primary endpoint. The analysis was based on 138 stroke patients reaching their primary safety outcome assessment six months after treatment. As no safety concerns have been raised and all patients (199) in NICHE have been recruited, the DSMB recommended the study team and subjects remain blinded and data collection completed. If the trial is allowed to run its course, including a six-month follow up, data analysis may enable improvement of any follow-up trial. NBT would target, on our estimates, a €1.6bn market globally, poorly served by costly occupational and physical therapies.

Contrasting solid proof-of-concept trial data

Nexstim initiated the pivotal, randomised, sham-controlled (two-to-one) and double-blind Phase III study across 12 US stroke rehab centres in H114. The primary objective of the NICHE trial was to demonstrate at least a five-point improvement in the upper extremity Fugl-Meyer (UEFM) score, representing a clinically important functional improvement from baseline six months after treatment. NICHE’s failure is surprising considering the robust data in the proof-of-concept study over 2010-13, which indicated a remarkable improvement (13.8 points vs 7.1 points in the sham group) in UEFM using NBT, superior to alternative therapy modalities. Patients on conventional occupational and physical therapies typically only experience three- to four-point UEFM improvement.

Financial forecasts and valuation suspended

FY15 revenues of €2.5m mainly stemmed from €1.9m in sales of the therapeutic device, NBS, used to localise speech and movement centres in the brain cortex before surgery. Despite some order deferrals in H216, NBS sales met our forecast. Operating costs were €1m higher than our estimates, reflecting 40% exposure to the US dollar, which appreciated nearly 20% between 2014 and 2015. However, we suspend our financial forecasts and valuation as it is uncertain if Nexstim will be able to bring NBT to the market, previously expected in FY17. We note that Nexstim believes it has sufficient cash until September 2016 and will review its strategy in the light of the NICHE trial failure.

Exhibit 1: Financial summary

€000's

2014

2015

Year end 31 December

**FAS

PROFIT & LOSS

Revenue*

 

 

2,210

2,528

Cost of Sales

(638)

(867)

Gross Profit

1,572

1,661

EBITDA

 

 

(7,422)

(9,315)

Operating Profit (before GW and except)

 

(7,654)

(9,592)

Intangible Amortisation

(146)

(142)

Exceptionals

-

-

Operating Profit

(7,800)

(9,734)

Other

-

-

Net Interest

(2,646)

(93)

Profit Before Tax (norm)

 

 

(10,300)

(9,685)

Profit Before Tax (FRS 3)

 

 

(10,445)

(9,827)

Tax

-

-

Profit After Tax (norm)

(10,300)

(9,685)

Profit After Tax (FRS 3)*

(10,445)

(9,827)

Average Number of Shares Outstanding (m)*

4.4

7.2

EPS - normalised (€)

 

 

(2.34)

(1.35)

EPS - FRS 3 (€)*

 

 

(2.37)

(1.37)

Dividend per share (€)

0.0

0.0

Gross Margin (%)

71.1

65.7

EBITDA Margin (%)

-335.8

-368.5

Operating Margin (before GW and except.) (%)

-346.3

-379.4

BALANCE SHEET

Fixed Assets

 

 

979

1,000

Intangible Assets

83

71

Tangible Assets

442

523

Other

454

406

Current Assets

 

 

13,014

3,640

Stocks

247

335

Debtors

930

889

Cash

11,484

2,062

Other

354

354

Current Liabilities

 

 

(1,928)

(2,206)

Creditors

(1,382)

(1,660)

Short term borrowings

0

0

Short term leases

0

0

Other

(546)

(546)

Long Term Liabilities

 

 

(3,475)

(3,405)

Long term borrowings

(3,405)

(3,405)

Long term leases

0

0

Other long term liabilities

(71)

0

Net Assets

 

 

8,590

(971)

CASH FLOW

Operating Cash Flow

 

 

(7,146)

(8,991)

Net Interest

(640)

9

Tax

0

0

Capex

(860)

(440)

Acquisitions/disposals

0

0

Financing

19,821

0

Dividends

0

0

Other

0

0

Net Cash Flow

11,177

(9,422)

Opening net debt/(cash)

 

 

3,098

(8,079)

HP finance leases initiated

-

-

Other

-

Closing net debt/(cash)

 

 

(8,079)

1,343

Source: Nexstim data. Note: *Only headline P&L data published 29 February; ** Finnish accounting standards.

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Schumannstrasse 34b

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Germany

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280 High Holborn

London, WC1V 7EE

United Kingdom

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10167, New York

US

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Wellington +64 (0)48 948 555

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Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Snakk Media — Update 29 February 2016

Snakk Media

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